Old National's Strong 2nd Quarter Driven by Robust Commercial Loan Growth and Net Interest Margin Expansion

Rhea-AI Summary

Old National Bancorp (ONB) reported a strong second quarter of 2022, with net income applicable to common shares of $111.0 million and diluted EPS of $0.38. Adjusted net income reached $134.6 million, or $0.46 per share. Highlights include a 17% increase in annualized loan growth, net interest income of $341.8 million, and a net interest margin of 3.33%. The merger with First Midwest Bancorp has positively impacted production, with total loans at $29.6 billion.

However, merger-related charges amounted to $36.6 million, influencing earnings.

Positive

• 17% annualized increase in total loans to $29.6 billion.
• Adjusted net income of $134.6 million or $0.46 per share.
• Net interest income rose to $341.8 million.
• Improved net interest margin at 3.33%, up 45 bps.
• Strong commercial loan production of $2.2 billion in Q2.

Negative

• Merger-related charges of $36.6 million impacting earnings.
• Non-performing loans increased to 0.78% from 0.88%.

EVANSVILLE, Ind., July 26, 2022 (GLOBE NEWSWIRE) --  

Old National Bancorp (NASDAQ: ONB) reports 2Q22 net income applicable to common shares of $111.0 million, diluted EPS of $0.38. Adjusted net income applicable to common shares1 of $134.6 million, or $0.46 per diluted common share.

CEO COMMENTARY:

“As evidenced by a 17% increase in annualized loan growth and strong net interest margin expansion, this was a very robust earnings quarter for Old National,” said CEO Jim Ryan. “We are especially pleased with the growth opportunities that are taking shape in our Chicagoland market as we begin to realize the full potential of our recently completed merger."

SECOND QUARTER HIGHLIGHTS²:

Net Income	Net income applicable to common shares of $111.0 million; adjusted net income applicable to common shares1 of $134.6 million
	Earnings per diluted common share ("EPS") of $0.38; adjusted EPS1 of $0.46
Net Interest Income/NIM	Net interest income on a fully taxable equivalent basis1 of $341.8 million
	Net interest margin on a fully taxable equivalent basis1 ("NIM") of 3.33%, up 45 basis points ("bps")
Operating Performance	Pre-provision net revenue1 (“PPNR”) of $153.5 million; adjusted PPNR1 of $191.7 million
	Noninterest expense of $277.4 million; adjusted noninterest expense1 of $239.3 million
	Efficiency ratio1 of 62.7%; adjusted efficiency ratio1 of 53.9%
Loans and Credit Quality	End-of-period total loans3 of $29.6 billion, up 17.0% annualized compared to $28.4 billion at March 31, 2022
	Total commercial loans increased 17.9% annualized, excluding Paycheck Protection Program ("PPP") loans1
	Total consumer loans4 increased 21.9% annualized
	Second quarter total commercial production of $2.2 billion
	June 30 commercial loan pipeline of $5.9 billion
	Provision for credit losses ("provision") of $9.2 million
	Net charge-offs of $1.8 million, or 2 bps of average loans
	Non-performing loans of 0.78% of total loans
Return Profile & Capital	Return on average tangible common equity1 of 16.9%; adjusted return on average tangible common equity1 of 20.4%
Notable Items	$36.6 million of merger-related charges
	$1.5 million of tax credit amortization

¹ Non-GAAP financial measure that management believes is useful in evaluating the financial results of the Company – refer to the Non-GAAP reconciliations contained in this release ² Certain comparisons to prior period are not meaningful due to the full quarter impact of the merger with First Midwest Bancorp, Inc. ("First Midwest") ³ Includes loans held for sale ⁴ Includes consumer and residential real estate loans

RESULTS OF OPERATIONS

Old National Bancorp ("Old National") reported second quarter 2022 net income applicable to common shares of $111.0 million, or $0.38 per diluted share.

Included in the second quarter were pre-tax charges of $36.6 million related to the February 15, 2022 merger with First Midwest. Excluding these charges and debt securities gains from the current quarter, adjusted net income was $134.6 million, or $0.46 per diluted share.

LOANS
Robust broad-based commercial and consumer loan growth.

• Period-end total loans³ were $29.6 billion at June 30, 2022, up 17.0% annualized from $28.4 billion at March 31, 2022, driven by strong commercial and consumer loan production.
• PPP loans decreased $123.8 million to $81.6 million at June 30, 2022, compared to $205.3 million at March 31, 2022.
• Excluding PPP loans, total loans increased 19.1%, annualized, and total commercial loans increased 17.9%, annualized.
• Total commercial loan production in the second quarter was $2.2 billion; period-end commercial pipeline totaled $5.9 billion.
• Consumer loans grew $86.0 million, or 12.9% annualized, to $2.8 billion and residential mortgage loans grew $372.9 million, or 26.1% annualized, to $6.1 billion, driven by strong production which was partially offset by acquired transactional portfolio run-off.
• Average total loans in the second quarter were $28.9 billion, an increase of $8.1 billion from the first quarter of 2022, driven by the full quarter impact of the merger with First Midwest, as well as organic loan growth.

DEPOSITS
Strong deposit franchise with stable balances.

• Period-end total deposits were $35.5 billion at June 30, 2022, consistent with $35.6 billion at March 31, 2022.
• The gradual deployment of commercial and retail deposits was partially offset by the seasonal increase in municipal deposits.
• On average, total deposits in the second quarter increased to $35.8 billion, compared to $26.9 billion for the first quarter of 2022, due primarily to the full quarter impact of the merger.
  

NET INTEREST INCOME AND MARGIN
Strong loan growth, the higher rate environment and the full quarter impact of the merger favorably impact net interest income and margin.

• Net interest income on a fully taxable equivalent basis increased to $341.8 million in the second quarter of 2022 compared to $226.6 million in the first quarter of 2022, driven by the full quarter impact of the merger, loan growth, higher interest rates, higher accretion income, and an additional day in the quarter.
• Net interest margin on a fully taxable equivalent basis increased 45 bps to 3.33% compared to 2.88% in the first quarter of 2022.
• PPP interest and net fees combined were $1.7 million, or less than 1 bp of net interest margin, in the second quarter of 2022 compared to $3.7 million, or 3 bps of net interest margin, in the first quarter of 2022.
• Accretion income on loans and borrowings was $35.0 million, or 34 bps of net interest margin, in the second quarter of 2022 compared to $15.9 million, or 20 bps of net interest margin, in the first quarter of 2022.
• Interest collected on nonaccrual loans was $3.2 million, or 3 bps of net interest margin, in the second quarter of 2022 compared to $1.1 million, or 1 bp of net interest margin, in the first quarter of 2022.
• Cost of total deposits continue to be low at 0.06%, increasing 1 bp in the second quarter of 2022 and the cost of total interest-bearing deposits increased just 2 bps to 0.09%.

CREDIT QUALITY
Strong credit quality continues to be a hallmark of the Old National franchise.

• Provision expense in the second quarter of 2022 was $9.2 million, compared to $97.6 million in the first quarter of 2022, which included $96.3 million of Current Expected Credit Losses ("CECL") Day 1 non-purchased credit deteriorated ("non-PCD") provision expense related to the allowance for credit losses established on acquired non-PCD loans as a result of the merger with First Midwest.
• Net charge-offs in the second quarter were $1.8 million, or 2 bps of average loans, compared to net charge-offs of $2.8 million in the first quarter of 2022, or 5 bps of average loans.
• 30+ day delinquencies were 0.17% at the end of the second quarter, down from 0.34% at the end of the first quarter.
• Non-performing loans improved as a percentage of total loans to 0.78% from 0.88% at the end of the first quarter due to the merger.
• Loans acquired from previous acquisitions were recorded at fair value at the acquisition date. As of June 30, 2022, the remaining discount on these acquired loans was $131 million.
• The allowance for credit losses stood at $288.0 million, or 0.97% of total loans at June 30, 2022, compared to 0.99% at March 31, 2022.

NONINTEREST INCOME
Increase driven by the full quarter impact of the merger.

• Total noninterest income for the second quarter of 2022 was $89.1 million, an increase of $23.9 million from the first quarter of 2022, driven by the full quarter impact of the merger.
• Mortgage banking revenue was impacted by the higher rate environment, lower gain on sale margins and a higher mix of portfolio production.
• Other income higher primarily due to equity investment returns and recoveries on previously charged-off acquired loans.
  

NONINTEREST EXPENSE
Increase due primarily to full quarter impact of operating costs associated with the merger; efficiency ratio improved.

• Noninterest expense for the second quarter of 2022 was $277.4 million and included $36.6 million of merger-related charges, as well as $1.5 million of tax credit amortization.
• Excluding these items, adjusted noninterest expense for the second quarter was $239.3 million, compared to $172.9 million in the first quarter of 2022, up due primarily to the full quarter impact of the merger, as well as higher incentive accruals reflective of strong performance.
• The second quarter efficiency ratio was 62.7%, while the adjusted efficiency ratio was 53.9% compared to 57.7% for the first quarter of 2022.
  

INCOME TAXES

• On a fully taxable equivalent basis, income tax expense in the second quarter was $29.3 million, resulting in a 20.3% FTE tax rate, compared to 15.2% in the first quarter of 2022, reflective of higher pre-tax net income.
• Income tax expense included $1.5 million of tax credit benefit.

CAPITAL AND LIQUIDITY
Capital ratios remain strong.

• Preliminary total risk-based capital was 12.03% and preliminary regulatory Tier 1 capital was 10.63%, impacted by strong loan growth, partly offset by retained earnings.
• Tangible common equity to tangible assets was 6.20% at the end of the second quarter compared to 6.51% in the first quarter of 2022, driven by the higher rate environment's impact on unrealized losses within the investment portfolio.
• The Company did not repurchase any shares of common stock during the quarter.
• A low loan to deposit ratio of 83.2%, combined with existing funding sources plus available unencumbered, high-quality collateral, provides strong liquidity.

HEALTH SAVINGS ACCOUNTS SALE
As previously disclosed on June 27, 2022, Old National Bank, a wholly-owned subsidiary of Old National Bancorp, entered into a Custodial Transfer and Asset Purchase Agreement with UMB Bank, n.a. (“UMB”), pursuant to which UMB will acquire Old National Bank’s business of acting as a qualified custodian for, and administering, health savings accounts. Old National Bank serves as custodian for health savings accounts comprised of both investment accounts and deposit accounts. Upon completion of the sale, UMB will pay Old National a premium on deposit account balances transferred at closing, or approximately $95 million based on June 30, 2022 balances. Subject to customary closing conditions and regulatory approval, the parties anticipate completing the sale in the fourth quarter of 2022.

NON-GAAP RECONCILIATIONS
See the "Use of Non-GAAP Financial Measures" section presented later in this release for a discussion of these non-GAAP financial measures.

($ in millions, except EPS, shares in 000s)	2Q22			Adjustments4			Adjusted 2Q22
Total Revenues (FTE)	$	430.9		$	0.1		$	431.0
Less: Provision for Credit Losses		9.2			—			9.2
Less: Noninterest Expenses		(277.4	)		36.6			(240.8	)
Income before Income Taxes (FTE)	$	144.3		$	36.7		$	181.0
Income Taxes (FTE)		(29.3	)		(13.1	)		(42.4	)
Net Income (loss)	$	115.0		$	23.6		$	138.6
Preferred Dividends		(4.0	)		—			(4.0	)
Net Income (loss) applicable to common shares	$	111.0		$	23.6		$	134.6
Weighted Average Diluted Shares Outstanding		291,881			—			291,881
Earnings Per Common Share - Diluted	$	0.38		$	0.08		$	0.46

⁴ Tax-effect calculations use management's estimate of the full year FTE tax rates (federal + state)

($ in millions)	2Q22			1Q22
Net Interest Income	$	337.5		$	222.8
Add: FTE Adjustment		4.3			3.8
Net Interest Income (FTE)	$	341.8		$	226.6
Average Earning Assets	$	41,003.3		$	31,483.6
Net Interest Margin (FTE)		3.33	%		2.88	%

($ in millions)	2Q22		1Q22
Net Interest Income	$	337.5	$	222.8
Add: FTE Adjustment		4.3		3.8
Net Interest Income (FTE)	$	341.8	$	226.6
Add: Total Noninterest Income		89.1		65.2
Less: Noninterest Expense		277.4		226.7
Pre-Provision Net Revenue	$	153.5	$	65.1
Less: Debt Securities (Gains)/Losses		0.1		(0.3	)
Add: Merger-Related Charges		36.6		52.3
Add: Amortization of Tax Credit Investments		1.5		1.5
Adjusted Pre-Provision Net Revenue	$	191.7	$	118.6

($ in millions, end of period balances)	2Q22			1Q22
Commercial Loans	$	20,721.0		$	19,962.0
Less: PPP Loans		(81.6	)		(205.3	)
Commercial Loans, excluding PPP Loans	$	20,639.4		$	19,756.7
Consumer and Residential Real Estate Loans		8,833.0			8,374.3
Total Loans, excluding PPP Loans	$	29,472.4		$	28,131.0

($ in millions)	2Q22			1Q22
Noninterest Expense	$	277.4		$	226.7
Less: Merger-Related Charges		(36.6	)		(52.3	)
Noninterest Expense less Charges	$	240.8		$	174.4
Less: Amortization of Tax Credit Investments		(1.5	)		(1.5	)
Adjusted Noninterest Expense	$	239.3		$	172.9
Less: Intangible Amortization		(7.2	)		(4.8	)
Adjusted Noninterest Expense Less Intangible Amortization	$	232.1		$	168.1
Net Interest Income	$	337.5		$	222.8
FTE Adjustment		4.3			3.8
Net Interest Income (FTE)	$	341.8		$	226.6
Total Noninterest Income		89.1			65.2
Total Revenue (FTE)	$	430.9		$	291.8
Less: Debt Securities (Gains)/Losses		0.1			(0.3	)
Adjusted Total Revenue (FTE)	$	431.0		$	291.5
Efficiency Ratio		62.7	%		76.2	%
Adjusted Efficiency Ratio		53.9	%		57.7	%

                

($ in millions)	2Q22			1Q22
Net (Loss) Income Applicable to Common Shares	$	111.0		$	(29.6	)
Add: Intangible Amortization (net of tax4)		5.4			3.9
Tangible Net (Loss) Income Applicable to Common Shares	$	116.3		$	(25.7	)
Less: Securities (Gains)/Losses (net of tax4)		0.1			(0.2	)
Add: Provision for credit losses - CECL Day 1 non-PCD provision expense5 (net of tax4)		—			78.6
Add: Merger-Related Charges (net of tax4)		23.5			42.8
Adjusted Tangible Net Income Applicable to Common Shares	$	139.9		$	95.5
Average Shareholders’ Common Equity		4,886.2			4,101.2
Less: Average Goodwill		(1,992.9	)		(1,476.7	)
Less: Average Intangibles		(144.1	)		(73.9	)
Average Tangible Shareholders’ Common Equity	$	2,749.2		$	2,550.6
Return on Average Common Equity		9.1	%	(2.9)   %
Adjusted Return on Average Common Equity		11.0	%		8.9	%
Return on Average Tangible Common Equity		16.9	%	(4.0)   %
Adjusted Return on Average Tangible Common Equity		20.4	%		15.0	%

⁵ Provision for Credit Losses adjustment refers to the initial increase in allowance for credit losses required
on acquired non-PCD loans through the provision for credit losses as a result of the completed merger

CONFERENCE CALL AND WEBCAST
Old National will host a conference call and live webcast at 9:00 a.m. Central Time on Tuesday, July 26, 2022, to review second quarter 2022 financial results. The live audio webcast link and corresponding presentation slides will be available on the Company’s Investor Relations web page at oldnational.com and will be archived there for 12 months. To listen to the live conference call, dial U.S. (844) 200-6205 or International (929) 526-1599, Access code 498391. A replay of the call will also be available from noon Central Time on July 26 through August 9. To access the replay, dial U.S. (866) 813-9403 or international +44 (204) 525-0658, Access code 946843.

ABOUT OLD NATIONAL
Old National Bancorp (NASDAQ: ONB), the holding company of Old National Bank, is the sixth largest commercial bank headquartered in the Midwest. With approximately $46 billion of assets and $28 billion of assets under management, Old National ranks among the top 35 banking companies based in the U.S. and has been recognized as a World’s Most Ethical Company by the Ethisphere Institute for eleven consecutive years.  Since its founding in 1834, Old National Bank has focused on community banking by building long-term, highly valued partnerships with clients and in the communities it serves. In addition to providing extensive services in retail and commercial banking, Old National offers comprehensive wealth management, investment, and capital market services. For more information and financial data, please visit Investor Relations at oldnational.com.

USE OF NON-GAAP FINANCIAL MEASURES
The Company's accounting and reporting policies conform to U.S. generally accepted accounting principles ("GAAP") and general practices within the banking industry. As a supplement to GAAP, the Company provides non-GAAP performance results, which the Company believes are useful because they assist investors in assessing the Company's operating performance. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the tables of this release.

The Company presents EPS, the efficiency ratio, return on average common equity, and return on average tangible common equity, all adjusted for certain notable items. These items include the CECL Day 1 non-PCD provision expense, merger related charges associated with completed acquisitions, and net securities gains. Management believes excluding these items from EPS, the efficiency ratio, return on average common equity, and return on average tangible common equity may be useful in assessing the Company's underlying operational performance since these items do not pertain to its core business operations and their exclusion may facilitate better comparability between periods. Management believes that excluding merger related charges and the CECL Day 1 non-PCD provision expense from these metrics may be useful to the Company, as well as analysts and investors, since these expenses can vary significantly based on the size, type, and structure of each acquisition. Additionally, management believes excluding these items from these metrics may enhance comparability for peer comparison purposes.

The Company presents loans excluding PPP loans. Management believes that excluding PPP loans is useful as it facilitates better comparability between periods. PPP loans are fully guaranteed by the Small Business Administration and are expected to be forgiven if the applicable criteria are met. Additionally, management believes excluding PPP loans from this item may enhance comparability for peer comparison.

Income tax expense, provision for credit losses, and the certain notable items listed above are excluded from the calculation of pre-provision net revenues, adjusted due to the fluctuation in income before income tax and the level of provision for credit losses required. Management believes pre-provision net revenues, adjusted may be useful in assessing the Company's underlying operating performance and their exclusion may facilitate better comparability between periods and for peer comparison purposes.

The Company presents adjusted noninterest expense, which excludes merger related charges, ONB Way charges and amortization of tax credit investments. Management believes that excluding these items from noninterest expense may be useful in assessing the Company’s underlying operational performance as these items either do not pertain to its core business operations or their exclusion may facilitate better comparability between periods and for peer comparison purposes.

The tax-equivalent adjustment to net interest income and net interest margin recognizes the income tax savings when comparing taxable and tax-exempt assets. Interest income and yields on tax-exempt securities and loans are presented using the current federal income tax rate of 21%. Management believes that it is standard practice in the banking industry to present net interest income and net interest margin on a fully tax-equivalent basis and that it may enhance comparability for peer comparison purposes.

In management's view, tangible common equity measures are capital adequacy metrics that may be meaningful to the Company, as well as analysts and investors, in assessing the Company's use of equity and in facilitating comparisons with peers. These non-GAAP measures are valuable indicators of a financial institution's capital strength since they eliminate intangible assets from stockholders' equity and retain the effect of accumulated other comprehensive loss in stockholders' equity.

Although intended to enhance investors' understanding of the Company's business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP. In addition, these non-GAAP financial measures may differ from those used by other financial institutions to assess their business and performance. See the previously provided tables and the following reconciliations in the "Non-GAAP Reconciliations" section for details on the calculation of these measures to the extent presented herein.

FORWARD-LOOKING STATEMENTS
This communication contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, descriptions of Old National’s financial condition, results of operations, asset and credit quality trends, profitability and business plans or opportunities. Forward-looking statements can be identified by the use of the words "anticipate," "believe," "contemplate," "could," "estimate," "expect," "intend," "may," "outlook," "plan," "should," and "will," and other words of similar meaning. These forward-looking statements express management’s current expectations or forecasts of future events and, by their nature, are subject to risks and uncertainties. There are a number of factors that could cause actual results or outcomes to differ materially from those in such statements. Factors that might cause such a difference include, but are not limited to: the continued impact of the COVID-19 pandemic on our business as well as the business of our customers; competition; government legislation, regulations and policies; ability of Old National to execute its business plan, including the completion of the integration related to the merger between Old National and First Midwest and the achievement of the synergies and other benefits from the merger; changes in economic conditions which could materially impact credit quality trends and the ability to generate loans and gather deposits; failure or circumvention of our internal controls; significant changes in accounting, tax or regulatory practices or requirements; new legal obligations; disruptive technologies in payment systems and other services traditionally provided by banks; failure or disruption of our information systems; computer hacking and other cybersecurity threats; other matters discussed in this communication; and other factors identified in our Annual Report on Form 10-K for the year ended December 31, 2021 and other filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date of this communication and are not guarantees of future results or performance, and Old National does not undertake an obligation to update these forward-looking statements to reflect events or conditions after the date of this communication.

CONTACTS:
Media: Kathy Schoettlin		Investors: Lynell Walton
(812) 465-7269		(812) 464-1366
Kathy.Schoettlin@oldnational.com		Lynell.Walton@oldnational.com

Financial Highlights (unaudited)
($ and shares in thousands, except per share data)
	Three Months Ended										Six Months Ended
	June 30,			March 31,			June 30,				June 30,			June 30,
		2022			2022			2021				2022			2021
Income Statement
Net interest income	$	337,472		$	222,785		$	149,927			$	560,257		$	298,047
Tax equivalent adjustment (1)		4,314			3,772			3,470				8,086			6,970
Net interest income - tax equivalent basis		341,786			226,557			153,397				568,343			305,017
Provision for credit losses		9,245			97,569			(4,929	)			106,814			(22,285	)
Noninterest income		89,117			65,240			51,508				154,357			108,220
Noninterest expense		277,395			226,756			129,618				504,151			247,358
Net income (loss) available to common shareholders		110,952			(29,603	)		62,786				81,349			149,604
Per Common Share Data
Weighted average diluted shares		291,881			227,002			165,934				260,253			165,821
Net income (loss) (diluted)	$	0.38		$	(0.13	)	$	0.38			$	0.31		$	0.90
Cash dividends		0.14			0.14			0.14				0.28			0.28
Common dividend payout ratio (2)		37	%	(108)        %				37	%			90	%		31	%
Book value	$	16.51		$	17.03		$	18.05			$	16.51		$	18.05
Stock price		14.79			16.38			17.61				14.79			17.61
Tangible common book value (3)		9.23			9.71			11.55				9.23			11.55
Performance Ratios
Return on average assets		1.0	%	(0.3)   %				1.1	%			0.4	%		1.3	%
Return on average common equity		9.1	%	(2.9)   %				8.4	%			3.6	%		10.0	%
Return on average tangible common equity (3)		16.9	%	(4.0)   %				13.6	%			6.8	%		16.2	%
Net interest margin (FTE)		3.33	%		2.88	%		2.91	%			3.13	%		2.93	%
Efficiency ratio (4)		62.7	%		76.2	%		62.1	%			68.1	%		58.8	%
Net charge-offs (recoveries) to average loans		0.02	%		0.05	%	(0.01)        %					0.04	%		0.00	%
Allowance for credit losses to ending loans		0.97	%		0.99	%		0.79	%			0.97	%		0.79	%
Non-performing loans to ending loans		0.78	%		0.88	%		1.03	%			0.78	%		1.03	%
Balance Sheet (EOP)
Total loans	$	29,553,648		$	28,336,244		$	13,784,677			$	29,553,648		$	13,784,677
Total assets		45,748,355			45,834,648			23,675,666				45,748,355			23,675,666
Total deposits		35,538,975			35,607,390			17,868,911				35,538,975			17,868,911
Total borrowed funds		4,384,411			4,347,560			2,559,113				4,384,411			2,559,113
Total shareholders' equity		5,078,783			5,232,114			2,991,118				5,078,783			2,991,118
Capital Ratios (3)
Risk-based capital ratios (EOP):
Tier 1 common equity		9.90	%		10.04	%		11.95	%			9.90	%		11.95	%
Tier 1		10.63	%		10.79	%		11.95	%			10.63	%		11.95	%
Total		12.03	%		12.19	%		12.73	%			12.03	%		12.73	%
Leverage ratio (to average assets)		8.19	%		10.58	%		8.38	%			8.19	%		8.38	%
Total equity to assets (averages)		11.22	%		12.03	%		12.61	%			11.57	%		12.69	%
Tangible common equity to tangible assets		6.20	%		6.51	%		8.47	%			6.20	%		8.47	%
Nonfinancial Data
Full-time equivalent employees		4,196			4,333			2,465				4,196			2,465
Banking centers		266			267			162				266			162
(1) Calculated using the federal statutory tax rate in effect of 21% for all periods.
(2) Cash dividends per common share divided by net income per common share (basic).
(3) Represents a non-GAAP financial measure. Refer the "Non-GAAP Measures" table for reconciliations to GAAP financial measures.
June 30, 2022 capital ratios are preliminary.
(4) Efficiency ratio is defined as noninterest expense before amortization of intangibles as a percent of FTE net interest income and
noninterest revenues, excluding net gains from debt securities transactions. This presentation excludes amortization of intangibles
and net debt securities gains, as is common in other company releases, and better aligns with true operating performance.
FTE - Fully taxable equivalent basis EOP - End of period actual balances PCD - Purchased credit deteriorated

Income Statement (unaudited)
($ and shares in thousands, except per share data)
	Three Months Ended										Six Months Ended
	June 30,			March 31,			June 30,				June 30,			June 30,
		2022			2022			2021				2022			2021
Interest income	$	354,358		$	235,505		$	160,458			$	589,863		$	319,695
Less: interest expense		16,886			12,720			10,531				29,606			21,648
Net interest income		337,472			222,785			149,927				560,257			298,047
Provision for credit losses		9,245			97,569			(4,929	)			106,814			(22,285	)
Net interest income after provision for credit losses		328,227			125,216			154,856				453,443			320,332
Wealth management fees		19,304			14,630			10,734				33,934			20,442
Service charges on deposit accounts		21,144			14,726			8,514				35,870			16,638
Debit card and ATM fees		10,402			6,899			5,583				17,301			10,726
Mortgage banking revenue		6,522			7,245			7,827				13,767			24,352
Investment product fees		8,568			7,322			6,042				15,890			11,906
Capital markets income		7,261			4,442			5,871				11,703			9,586
Company-owned life insurance		4,571			3,524			2,783				8,095			5,497
Other income		11,430			6,110			3,462				17,540			6,388
Gains (losses) on sales of debt securities		(85	)		342			692				257			2,685
Total noninterest income		89,117			65,240			51,508				154,357			108,220
Salaries and employee benefits		161,817			124,147			72,640				285,964			140,757
Occupancy		26,496			21,019			14,054				47,515			28,926
Equipment		7,550			5,168			4,506				12,718			8,475
Marketing		9,119			4,276			2,632				13,395			4,694
Data processing		25,883			18,762			11,697				44,645			24,050
Communication		5,878			3,417			2,411				9,295			5,289
Professional fees		6,336			19,791			8,528				26,127			11,252
FDIC assessment		4,699			2,575			1,226				7,274			2,833
Amortization of intangibles		7,170			4,811			2,909				11,981			5,984
Amortization of tax credit investments		1,525			1,516			1,813				3,041			3,015
Other expense		20,922			21,274			7,202				42,196			12,083
Total noninterest expense		277,395			226,756			129,618				504,151			247,358
Income (loss) before income taxes		139,949			(36,300	)		76,746				103,649			181,194
Income tax expense (benefit)		24,964			(8,714	)		13,960				16,250			31,590
Net income (loss)	$	114,985		$	(27,586	)	$	62,786			$	87,399		$	149,604
Preferred dividends		(4,033	)		(2,017	)		—				(6,050	)		—
Net income (loss) applicable to common shares	$	110,952		$	(29,603	)	$	62,786			$	81,349		$	149,604
Diluted Earnings Per Common Share
Net income (loss)	$	0.38		$	(0.13	)	$	0.38			$	0.31		$	0.90
Average Common Shares Outstanding
Basic		290,862			227,002			165,175				259,108			165,086
Diluted		291,881			227,002			165,934				260,253			165,821
Common shares outstanding at end of period		292,893			292,959			165,732				292,893			165,732

 

End of Period Balance Sheet (unaudited)
($ in thousands)
	June 30,				March 31,				June 30,
		2022				2022				2021
Assets
Federal Reserve Bank account	$	334,570			$	1,545,389			$	287,446
Money market investments		7,774				12,419				15,294
Investments:
Treasury and government-sponsored agencies		2,461,173				2,527,568				1,657,079
Mortgage-backed securities		5,976,921				6,086,853				3,280,983
States and political subdivisions		1,839,333				1,840,823				1,567,931
Other securities		719,223				735,550				441,037
Total investments		10,996,650				11,190,794				6,947,030
Loans held for sale, at fair value		26,217				39,376				50,121
Loans:
Commercial		8,923,983				8,624,253				3,802,943
Commercial and agriculture real estate		11,796,503				11,337,735				6,187,318
Consumer:
Home equity		1,097,852				1,080,885				549,951
Other consumer loans		1,656,253				1,587,216				1,029,409
Subtotal of commercial and consumer loans		23,474,591				22,630,089				11,569,621
Residential real estate		6,079,057				5,706,155				2,215,056
Total loans		29,553,648				28,336,244				13,784,677
Total earning assets		40,918,859				41,124,222				21,084,568
Allowance for credit losses on loans		(288,003	)			(280,507	)			(109,444	)
Non-earning Assets:
Cash and due from banks		455,620				418,744				188,391
Premises and equipment, net		586,031				584,113				484,879
Operating lease right-of-use assets		192,196				201,802				72,207
Goodwill and other intangible assets		2,131,815				2,144,609				1,077,024
Company-owned life insurance		769,595				766,291				459,565
Other assets		982,242				875,374				418,476
Total non-earning assets		5,117,499				4,990,933				2,700,542
Total assets	$	45,748,355			$	45,834,648			$	23,675,666
Liabilities and Equity
Noninterest-bearing demand deposits	$	12,388,379			$	12,463,136			$	6,142,724
Interest-bearing:
Checking and NOW accounts		8,473,510				8,296,337				4,921,430
Savings accounts		6,796,152				6,871,767				3,675,701
Money market accounts		5,373,318				5,432,139				2,126,537
Other time deposits		2,479,304				2,544,011				1,002,519
Total core deposits		35,510,663				35,607,390				17,868,911
Brokered deposits		28,312				—				—
Total deposits		35,538,975				35,607,390				17,868,911
Federal funds purchased and interbank borrowings		1,561				1,721				1,523
Securities sold under agreements to repurchase		476,173				509,275				396,129
Federal Home Loan Bank advances		3,283,963				3,239,357				1,891,143
Other borrowings		622,714				597,207				270,318
Total borrowed funds		4,384,411				4,347,560				2,559,113
Operating lease liabilities		215,188				234,049				81,333
Accrued expenses and other liabilities		530,998				413,535				175,191
Total liabilities		40,669,572				40,602,534				20,684,548
Preferred stock, common stock, surplus, and retained earnings		5,647,916				5,570,313				2,928,856
Accumulated other comprehensive income (loss), net of tax		(569,133	)			(338,199	)			62,262
Total shareholders' equity		5,078,783				5,232,114				2,991,118
Total liabilities and shareholders' equity	$	45,748,355			$	45,834,648			$	23,675,666

Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
		Three Months Ended								Three Months Ended								Three Months Ended
		June 30, 2022								March 31, 2022								June 30, 2021
		Average			Income (1)/		Yield/			Average			Income (1)/		Yield/			Average			Income (1)/		Yield/
Earning Assets:		Balance			Expense		Rate			Balance			Expense		Rate			Balance			Expense		Rate
Money market and other interest-earning
investments		$	1,088,005		$	1,830	0.67	%		$	1,336,404		$	308	0.09	%		$	232,723		$	48	0.08	%
Investments:
Treasury and government-sponsored agencies			2,487,717			11,818	1.90	%			2,195,470			8,219	1.50	%			1,637,396			5,967	1.46	%
Mortgage-backed securities			6,008,470			33,534	2.23	%			4,869,038			24,377	2.00	%			3,287,254			15,067	1.83	%
States and political subdivisions			1,834,189			14,571	3.18	%			1,738,652			13,637	3.14	%			1,503,447			12,364	3.29	%
Other securities			723,279			5,467	3.02	%			605,552			4,144	2.74	%			439,197			2,690	2.45	%
Total investments			11,053,655			65,390	2.37	%			9,408,712			50,377	2.14	%			6,867,294			36,088	2.10	%
Loans: (2)
Commercial			8,692,646			95,743	4.36	%			5,893,907			55,283	3.75	%			4,019,553			34,715	3.42	%
Commercial and agriculture real estate			11,547,958			113,545	3.89	%			8,749,162			77,408	3.54	%			6,146,057			57,655	3.71	%
Consumer:
Home equity			1,000,373			11,256	4.51	%			783,729			7,355	3.81	%			538,999			4,201	3.13	%
Other consumer loans			1,715,550			19,222	4.49	%			1,320,923			14,560	4.47	%			1,034,439			9,747	3.78	%
Subtotal commercial and consumer loans			22,956,527			239,766	4.19	%			16,747,721			154,606	3.74	%			11,739,048			106,318	3.63	%
Residential real estate loans			5,905,151			51,686	3.50	%			3,990,716			33,986	3.41	%			2,256,215			21,474	3.81	%
Total loans			28,861,678			291,452	4.01	%			20,738,437			188,592	3.64	%			13,995,263			127,792	3.62	%
Total earning assets		$	41,003,338		$	358,672	3.48	%		$	31,483,553		$	239,277	3.04	%		$	21,095,280		$	163,928	3.09	%
Less: Allowance for credit losses on loans			(282,943	)							(168,175	)							(117,020	)
Non-earning Assets:
Cash and due from banks		$	277,283							$	268,836							$	238,326
Other assets			4,735,701								3,480,640								2,520,937
Total assets		$	45,733,379							$	35,064,854							$	23,737,523
Interest-Bearing Liabilities:
Checking and NOW accounts		$	8,445,683		$	1,786	0.08	%		$	6,784,653		$	596	0.04	%		$	4,948,773		$	513	0.04	%
Savings accounts			6,835,675			673	0.04	%			5,302,015			589	0.05	%			3,647,952			492	0.05	%
Money market accounts			5,317,300			1,027	0.08	%			3,778,682			691	0.07	%			2,081,286			433	0.08	%
Other time deposits			2,491,998			1,627	0.26	%			1,745,153			1,318	0.31	%			1,024,777			1,293	0.51	%
Total interest-bearing core deposits			23,090,656			5,113	0.09	%			17,610,503			3,194	0.07	%			11,702,788			2,731	0.09	%
Brokered deposits			7,447			74	0.00	%			—			—	0.00	%			9,890			1	0.05	%
Total interest-bearing deposits			23,098,103			5,187	0.09	%			17,610,503			3,194	0.07	%			11,712,678			2,732	0.09	%
Federal funds purchased and interbank borrowings			1,222			2	0.47	%			1,113			—	0.01	%			1,460			—	0.02	%
Securities sold under agreements to repurchase			466,885			85	0.07	%			449,939			96	0.09	%			406,251			95	0.09	%
Federal Home Loan Bank advances			3,053,423			6,925	0.91	%			2,589,984			5,963	0.93	%			1,906,078			5,218	1.10	%
Other borrowings			611,772			4,687	3.06	%			432,434			3,467	3.21	%			269,259			2,486	3.69	%
Total borrowed funds			4,133,302			11,699	1.14	%			3,473,470			9,526	1.11	%			2,583,048			7,799	1.21	%
Total interest-bearing liabilities		$	27,231,405		$	16,886	0.25	%		$	21,083,973		$	12,720	0.24	%		$	14,295,726		$	10,531	0.30	%
Noninterest-Bearing Liabilities and Shareholders' Equity
Demand deposits		$	12,714,946							$	9,294,876							$	6,140,424
Other liabilities			657,128								467,589								308,680
Shareholders' equity			5,129,900								4,218,416								2,992,693
Total liabilities and shareholders' equity		$	45,733,379							$	35,064,854							$	23,737,523
Net interest rate spread							3.23	%							2.80	%							2.79	%
Net interest margin (FTE)							3.33	%							2.88	%							2.91	%
FTE adjustment					$	4,314							$	3,772							$	3,470
(1) Interest income is reflected on a FTE.
(2) Includes loans held for sale.

Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
		Six Months Ended								Six Months Ended
		June 30, 2022								June 30, 2021
		Average			Income (1)/		Yield/			Average			Income (1)/		Yield/
Earning Assets:		Balance			Expense		Rate			Balance			Expense		Rate
Money market and other interest-earning
investments		$	1,211,518		$	2,138	0.36	%		$	301,025		$	136	0.09	%
Investments:
Treasury and government-sponsored agencies			2,342,401			20,038	1.71	%			1,397,791			10,852	1.55	%
Mortgage-backed securities			5,441,902			57,910	2.13	%			3,299,713			30,900	1.87	%
States and political subdivisions			1,786,684			28,208	3.16	%			1,490,865			24,564	3.30	%
Other securities			664,741			9,611	2.89	%			446,266			5,433	2.44	%
Total investments		$	10,235,728		$	115,767	2.26	%		$	6,634,635		$	71,749	2.16	%
Loans: (2)
Commercial			7,301,008			151,026	4.11	%			3,997,281			70,282	3.50	%
Commercial and agriculture real estate			10,156,292			190,952	3.74	%			6,063,872			113,401	3.72	%
Consumer:
Home equity			892,649			18,611	4.20	%			541,510			8,353	3.11	%
Other consumer loans			1,519,327			33,782	4.48	%			1,046,518			19,923	3.84	%
Subtotal commercial and consumer loans			19,869,276			394,371	4.00	%			11,649,181			211,959	3.67	%
Residential real estate loans			4,953,222			85,673	3.46	%			2,264,988			42,821	3.78	%
Total loans			24,822,498			480,044	3.86	%			13,914,169			254,780	3.65	%
Total earning assets		$	36,269,744		$	597,949	3.29	%		$	20,849,829		$	326,665	3.13	%
Less: Allowance for credit losses			(225,876	)							(125,398	)
Non-earning Assets:
Cash and due from banks		$	273,083							$	263,336
Other assets			4,111,637								2,503,865
Total assets		$	40,428,588							$	23,491,632
Interest-Bearing Liabilities:
Checking and NOW accounts		$	7,619,757		$	2,381	0.06	%		$	4,906,530		$	1,124	0.05	%
Savings accounts			6,073,081			1,262	0.04	%			3,572,057			979	0.06	%
Money market accounts			4,552,241			1,719	0.08	%			2,034,577			855	0.08	%
Other time deposits			2,120,638			2,945	0.28	%			1,052,856			2,902	0.56	%
Total interest-bearing core deposits			20,365,717			8,307	0.08	%			11,566,020			5,860	0.10	%
Brokered deposits			3,744			74	3.99	%			83,427			31	0.08	%
Total interest-bearing deposits			20,369,461			8,381	0.08	%			11,649,447			5,891	0.10	%
Federal funds purchased and interbank borrowings			1,168			2	0.25	%			1,303			—	0.00	%
Securities sold under agreements to repurchase			458,459			181	0.08	%			402,478			215	0.11	%
Federal Home Loan Bank advances			2,822,984			12,888	0.92	%			1,915,661			10,627	1.12	%
Other borrowings			522,599			8,154	3.12	%			266,152			4,915	3.69	%
Total borrowed funds			3,805,210			21,225	1.12	%			2,585,594			15,757	1.23	%
Total interest-bearing liabilities			24,174,671			29,606	0.25	%			14,235,041			21,648	0.31	%
Noninterest-Bearing Liabilities and Shareholders' Equity
Demand deposits		$	11,014,359							$	5,949,412
Other liabilities			562,882								325,781
Shareholders' equity			4,676,676								2,981,398
Total liabilities and shareholders' equity		$	40,428,588							$	23,491,632
Net interest rate spread							3.04	%							2.82	%
Net interest margin (FTE)							3.13	%							2.93	%
FTE adjustment					$	8,086							$	6,970
(1) Interest income is reflected on a FTE.
(2) Includes loans held for sale.

Asset Quality (EOP) (unaudited)
($ in thousands)
	Three Months Ended										Six Months Ended
	June 30,			March 31,			June 30,				June 30,			June 30,
		2022			2022			2021				2022			2021
Allowance for credit losses on loans:
Beginning allowance for credit losses	$	280,507		$	107,341		$	114,037			$	107,341		$	131,388
Allowance established for acquired PCD loans		—			78,531			—				78,531			—
Provision for credit losses(1)		9,254			97,409			(4,929	)			106,663			(22,285	)
Gross charge-offs		(4,096	)		(4,664	)		(980	)			(8,760	)		(2,550	)
Gross recoveries		2,338			1,890			1,316				4,228			2,891
Net (charge-offs) recoveries		(1,758	)		(2,774	)		336				(4,532	)		341
Ending allowance for credit losses	$	288,003		$	280,507		$	109,444			$	288,003		$	109,444
Net charge-offs (recoveries) / average loans(2)		0.02	%		0.05	%	(0.01)        %					0.04	%		0.00	%
Average loans outstanding(2)	$	28,847,003		$	20,725,313		$	13,984,295			$	24,808,593		$	13,900,371
EOP loans outstanding(2)		29,553,648			28,336,244			13,784,677				29,553,648			13,784,677
Allowance for credit losses / EOP loans(2)		0.97	%		0.99	%		0.79	%			0.97	%		0.79	%
Underperforming Assets:
Loans 90 Days and over (still accruing)	$	882		$	1,646		$	9			$	882		$	9
Non-performing loans:
Nonaccrual loans(3)		214,924			227,925			128,268				214,924			128,268
TDRs still accruing		15,665			20,999			14,222				15,665			14,222
Total non-performing loans		230,589			248,924			142,490				230,589			142,490
Foreclosed assets		12,618			19,713			520				12,618			520
Total underperforming assets	$	244,089		$	270,283		$	143,019			$	244,089		$	143,019
Classified and Criticized Assets:
Nonaccrual loans(3)		214,924			227,925			128,268				214,924			128,268
Substandard accruing loans		490,566			518,341			160,995				490,566			160,995
Loans 90 days and over (still accruing)		882			1,646			9				882			9
Total classified loans - "problem loans"	$	706,372		$	747,912		$	289,272			$	706,372		$	289,272
Other classified assets		25,004			24,676			4,305				25,004			4,305
Criticized loans - "special mention loans"		452,835			507,689			228,264				452,835			228,264
Total classified and criticized assets	$	1,184,211		$	1,280,277		$	521,841			$	1,184,211		$	521,841
Non-performing loans / EOP loans(2)		0.78	%		0.88	%		1.03	%			0.78	%		1.03	%
Allowance to non-performing loans		125	%		113	%		77	%			125	%		77	%
Under-performing assets / EOP loans(2)		0.83	%		0.95	%		1.04	%			0.83	%		1.04	%
EOP total assets	$	45,748,355		$	45,834,648		$	23,675,666			$	45,748,355		$	23,675,666
Under-performing assets / EOP assets		0.53	%		0.59	%		0.60	%			0.53	%		0.60	%
EOP - End of period actual balances
(1) Excludes $0.2 million of expense to establish an allowance on held-to-maturity securities during the first quarter of 2022.
(2) Excludes loans held for sale.
(3) Includes non-accruing TDRs totaling $24.3 million at June 30, 2022, $23.8 million at March 31, 2022, and $13.6 million at June 30, 2021.
TDR - Troubled debt restructuring

Non-GAAP Measures (unaudited)
($ in thousands)
	Three Months Ended										Six Months Ended
	June 30,			March 31,			June 30,				June 30,			June 30,
		2022			2022			2021				2022			2021
Actual End of Period Balances
GAAP shareholders' common equity	$	4,835,064		$	4,988,395		$	2,991,118			$	4,835,064		$	2,991,118
Deduct:
Goodwill		1,991,534			1,997,157			1,036,994				1,991,534			1,036,994
Intangibles		140,281			147,452			40,030				140,281			40,030
		2,131,815			2,144,609			1,077,024				2,131,815			1,077,024
Tangible shareholders' common equity	$	2,703,249		$	2,843,786		$	1,914,094			$	2,703,249		$	1,914,094
Average Balances
GAAP shareholders' common equity	$	4,886,181		$	4,101,206		$	2,992,693			$	4,495,862		$	2,981,398
Deduct:
Goodwill		1,992,860			1,476,726			1,036,994				1,736,227			1,036,994
Intangibles		144,104			73,898			41,410				109,195			42,901
		2,136,964			1,550,624			1,078,404				1,845,422			1,079,895
Average tangible shareholders' common equity	$	2,749,217		$	2,550,582		$	1,914,289			$	2,650,440		$	1,901,503
Actual End of Period Balances
GAAP assets	$	45,748,355		$	45,834,648		$	23,675,666			$	45,748,355		$	23,675,666
Add:
Trust overdrafts		—			1			24				—			24
Deduct:
Goodwill		1,991,534			1,997,157			1,036,994				1,991,534			1,036,994
Intangibles		140,281			147,452			40,030				140,281			40,030
		2,131,815			2,144,609			1,077,024				2,131,815			1,077,024
Tangible assets	$	43,616,540		$	43,690,040		$	22,598,666			$	43,616,540		$	22,598,666
Risk-weighted assets (2)	$	33,662,205		$	32,341,335		$	15,971,711			$	33,662,205		$	15,971,711
GAAP net income (loss) applicable to common shares	$	110,952		$	(29,603	)	$	62,786			$	81,349		$	149,604
Add:
Amortization of intangibles (net of tax)		5,378			3,934			2,182				9,312			4,488
shares	$	116,330		$	(25,669	)	$	64,968			$	90,661		$	154,092
Tangible Ratios
Return on average tangible common equity		16.93	%	(4.03)        %				13.58	%			6.84	%		16.21	%
Tangible common equity to tangible assets		6.20	%		6.51	%		8.47	%			6.20	%		8.47	%
Tangible common equity to risk-weighted assets (2)		8.03	%		8.79	%		11.98	%			8.03	%		11.98	%
Tangible common book value (1)		9.23			9.71			11.55				9.23			11.55
Tangible common equity presentation includes other comprehensive income as is common in other company releases.
(1) Tangible common shareholders' equity divided by common shares issued and outstanding at period-end.
Tier 1 common equity (2)	$	3,333,380		$	3,246,482		$	1,908,053			$	3,333,380		$	1,908,053
Risk-weighted assets (2)		33,662,205			32,341,335			15,971,711				33,662,205			15,971,711
Tier 1 common equity to risk-weighted assets (2)		9.90	%		10.04	%		11.95	%			9.90	%		11.95	%
(2) June 30, 2022 figures are preliminary.

 

FAQ

What is Old National Bancorp's net income for Q2 2022?

Old National Bancorp reported a net income of $111.0 million for the second quarter of 2022.

What are the earnings per share for ONB in Q2 2022?

The diluted earnings per share (EPS) for Old National Bancorp in Q2 2022 was $0.38.

How much did Old National's total loans increase by in Q2 2022?

Total loans increased by 17% annualized, reaching $29.6 billion.

What was the net interest margin for ONB in Q2 2022?

The net interest margin for Old National Bancorp in Q2 2022 was 3.33%.

What merger-related charges did Old National Bancorp report?

Old National Bancorp reported $36.6 million in merger-related charges in Q2 2022.